Peso closes at P41.615 to the dollar, a 4.5-yr high

MANILA, Philippines – The peso rose to a nearly 4.5-year-high at P41.615 to the dollar when the foreign exchange market closed on Monday, September 10.

With a total volume of US$425 million at the Philippine Dealing System, the peso traded between P41.54 and P41.62 during the day. It was stronger than the P41.68 rate on Friday, September 7.

Analysts attributed the strong peso on investors’ sentiments on the dollar.

The recently released and lower-than-expected jobs report in the US did not bode well for the greenback. At the same time, the European Central Bank’s recent meeting boosted confidence in the euro, causing investors to dump the dollar.

The peso has been outperforming other Southeast Asian currencies in recent months as the country’s usual sources of dollar inflows remain strong.  

Remittances from overseas Filipino workers have remained strong, while foreign investments in the business process outsourcing sector, and “hot money” from foreign investors continues to pour into the Philippine Stock Exchange.

A strong peso, however, is double-edged. While it reduces the cost of servicing the foreign denominated debts of the Philippine government, a strong local currency also means the products of exporters are less competitive abroad. Imports also become cheaper, threatening the local manufacturing industry.

The recipients of OFW remittances also see their money’s buying power slashed. Remittances fuel consumer spending, which is the Philippine economy’s main driver of growth. – Rappler.com